By Phil Franz-Warkentin, Commodity News Service Canada
March 10, 2014
Winnipeg – ICE Futures Canada canola contracts were weaker on Monday, dropping in sympathy with the CBOT soy complex.
Larger than expected US soybean ending stocks and Brazilian soybean production estimates from the USDA sent soybean prices down sharply on Monday, which weighed on canola as well, said traders.
US soybean stocks at the close of the current crop year are now forecast to come in at 145 million bushels, according to the USDA. While that was down slightly from the February estimate, trade participants had been expecting even tighter supplies. In addition, the USDA pegged Brazil’s crop at 88.5 million tonnes, which was above average trade guesses of about 88.1 million.
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Increased farmer selling and the ongoing logistics issues across the Canadian Prairies added to the softer tone in canola.
However, canola remains cheap compared to most other oilseeds, and speculative short covering did help temper the declines. A softer tone in the Canadian dollar was also supportive.
About 11,866 canola contracts were traded on Monday, which compares with Friday when 27,733 contracts changed hands. Spreading accounted for 7,688 of the contracts traded.
Milling wheat, durum and barley futures were untraded, after seeing some price revisions following Friday’s close.
SOYBEAN futures at the Chicago Board of Trade settled 10 to 39 cents per bushel lower on Monday as the market reacted bearishly to updated supply/demand data from the USDA.
US soybean stocks at the close of the current crop year are now forecast to come in at 145 million bushels, according to the USDA. While that was down slightly from the February estimate, trade participants had been expecting even tighter supplies. In addition, the USDA pegged Brazil’s crop at 88.5 million tonnes, which was above average trade guesses of about 88.1 million.
While the immediate response was bearish, the bigger US supplies and resulting drop in prices could open the door for increased US export business going forward, said analysts.
SOYOIL futures were weaker on Monday, also reacting to the USDA report. However, a firmer tone in Malaysian palm oil did provide some underlying support.
SOYMEAL futures were lower on Monday, following soybeans.
CORN futures in Chicago settled with losses of five to 11 cents, with larger global supplies putting some pressure on the market.
US corn ending stocks were forecast at 1.456 billion bushels by the USDA, which was slightly below trade guesses. However, the supplies will still be well ahead of the 821 million bushels carried over from the previous year.
In addition, the USDA forecast world corn stocks at the end of the current marketing year at 158.47 million tonnes, which topped pre-report expectations.
WHEAT futures in Chicago settled 12 to 13 cents per bushel lower on Monday, with large global supplies behind some of the weakness. Kansas City wheat futures were down five to ten cents, while Minneapolis prices declined by six to 13 cents.
The USDA’s domestic supply/demand estimates for wheat were largely left unchanged from February. The country’s wheat inventories at the close of the current marketing year are forecast at 558 million bushels by the USDA, which was slightly below trade guesses of 567.75 million.
Global wheat production for the year was forecast at 712.7 million tonnes by the government agency, which was up by 800,000 tonnes from its previous estimate.
The political uncertainty in the Black Sea region remains supportive for US wheat, while recent weather concerns across parts of the US winter wheat growing areas also helped temper the declines.
Settlement prices are in Canadian dollars per metric ton.
